Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

Weekly Market Watch by Galt & Taggart

The FINANCIAL -- Economy

Exports up 27.2% y/y in September 2017

In September 2017, exports increased 27.2% y/y to US$ 257.5mn, imports were up 5.5% y/y to US$ 684.8mn and the trade deficit narrowed 4.3% y/y to US$ 427.3mn according to GeoStat’s preliminary figures. In 9M17, trade deficit was down 1.1% to US$ 3.7bn as exports increased 28.3% y/y to US$ 1.9bn, while imports were up 7.4% y/y to US$ 5.6bn. Detailed foreign trade statistics will be available on October 19, 2017.

IMF revises Georgia’s real GDP growth upwards to 4.3% in 2017 from 3.5%: IMF team visited Tbilisi from Sep-25 to Oct-9 to conduct discussions on the first review of the IMF program approved in April 2017. Completion of the review will make an additional US$ 42.3mn available to Georgia, bringing total disbursements to US$ 84.6mn out of total US$ 285.3mn program amount. At the conclusion of the mission, IMF staff issued the following statement: “Georgia’s economic reform program is off to a strong start. All quantitative performance targets for end-June were met, most by large margins. The economy has grown faster than expected this year due to prudent policies and stronger economic activity in Georgia’s main trading partners. Growth has been revised upwards to 4.3% in 2017 from 3.5%, supported by exports, tourism, and investment. The current account balance is projected to narrow to 10.4% of GDP in 2017, from 12.8% of GDP in 2016. Economic growth is expected to strengthen over the medium term with continued implementation of the economic reforms. These reforms will promote private investment, productivity growth, and improve export competitiveness”.

Fixed income

Corporate Eurobonds: BGEO Group Eurobonds (BGEOLN) closed at 5.4% yield, trading at 103.1 (-0.2% w/w). Bank of Georgia GEL-denominated Eurobonds (GEBGG) were trading at 100.0 (unchanged w/w), yielding 11.0%. GOGC Eurobonds (GEOROG) were trading at 106.7 (+0.4% w/w), yielding 4.7%. Georgian Railway Eurobonds (GRAIL) traded at a premium at 111.7 (+0.2% w/w), yielding 5.0%.

Georgian Sovereign Eurobonds (GEORG) closed at 112.5 (+0.1% w/w) at 3.1% yield to maturity.. Georgia Eurobonds, YTM (%)

Equities

BGEO Group (BGEO LN) shares closed at GBP 33.65/share (-0.18% w/w and -0.09% m/m). More than 267k shares traded in the range of GBP 32.49 – 33.77/share. Average daily traded volume was 48k in the last 4 weeks. FTSE 250 Index, of which BGEO is a constituent, gained 0.53% w/w and gained 3.48% m/m. The volume of BGEO shares traded was at 0.68% of its capitalization.

TBC Bank Group (TBCG LN) closed the week at GBP 16.35 (-2.62% w/w and -0.30% m/m). More than 168k shares changed hands in the range of GBP 15.80 – 16.80 share. Averaged daily traded volume was 22k in the last 4 weeks.

Georgia Healthcare Group (GHG LN) shares closed at GBP 3.40/share (+15.17% w/w and +2.95% m/m). More than 180k shares were traded in the range of GBP 2.90 – 3.44/share. Average daily traded volume was 32k in the last 4 weeks. The volume of GHG shares traded was at 0.14% of its capitalization.

Money Market

Refinancing loans: National Bank of Georgia (NBG) issued 7-day refinancing loans of GEL 1,100mn (US$ 443.6mn).

Ministry of Finance Treasury Bills:

182-days GEL 20.0mn (US$ 8.1mn) T-Bills of Ministry of Finance were sold at the auction held at NBG on October 11, 2017. The weighted average yield was fixed at 7.122%. .

Ministry of Finance Treasury Notes:

2-year GEL 20.0mn (US$ 8.1mn) T-Notes of Ministry of Finance were sold at the auction held at NBG on October 11, 2017. The weighted average yield was fixed at 7.338%. The nearest treasury security auction is scheduled for October 11, 2017, where GEL 20.0mn nominal value 2-year T-Notes and GEL 20.0mn nominal value 182-days T-Bills will be sold.